A very interesting thread. An important thing for new investors to learn is not just the “Do’s” but the “Don’ts”. So, here are a few from my own experience, you can add more to the list.
If the below list is diligently followed, not only will many an accident be avoided but you will also save a lot of time from being wasted in analysing the wrong stocks.
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Before you start out, decide on your asset allocation – what % you want to invest in equity. And don’t violate that rule, no matter what
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Don’t leverage, borrow, buy on margin etc. Make full payment upfront
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Don’t invest in lump sum. Gradually increase your exposure – to individual stocks as well as to the equity asset class
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Don’t buy small caps. In most cases, small caps are small caps because they deserve it
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Don’t buy leveraged stocks – for example, anything beyond Debt – Equity ratio of 1:1
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Don’t buy high P/E stocks – for example, ignore anything more than P/E of 30 (even this is aggressive I think)
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Don’t buy BFSI stocks
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Don’t average down
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Don’t watch business channels
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Don’t take free recommendations seriously (e.g. Moneycontrol, Economic Times, Twitter, Diwali Dhamaka stocks etc.)
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Don’t keep more than 20 stocks in your portfolio – you can’t monitor more than that
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Don’t compare your performance to anything – including market indices, mutual funds, your friends & relatives. Don’t try to beat others.
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Don’t retain a psychological attachment to your purchase price. Once you buy, your purchase price is irrelevant
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Don’t track your exposures to cost. Always mark to market
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And finally, if your stock goes up after you buy, don’t assume you are a genius. It was pure luck.